37026 Federal Register / Vol. 63, No. 130 /Wednesday, July 8, 1998 / Notices

DEPARTMENT OF EDUCATION

William D. Ford Federal Direct Loan

Program; Federal Family Education

Loan Program

AGENCY: Office of Postsecondary

Education, Department of Education

ACTION: Notice of interest rates for the

William D. Ford Federal Direct Loan

Program and the Federal Family

Education Loan Program for the period

July 1, 1998, through June 30, 1999.

SUMMARY: The Assistant Secretary for

Postsecondary Education announces the

interest rates for variable-rate loans

made under the William D. Ford Federal

Direct Loan (Direct Loan) Program and

the Federal Family Education Loan

(FFEL) Program for the period July 1,

1998–June 30, 1999.

FOR FURTHER INFORMATION CONTACT: For

the FFEL Program: Brian Smith,

Program Specialist. For the Direct Loan

Program: Barbara F. Grayson, Program

Specialist. Mailing address: Policy

Development Division, Office of

Postsecondary Education, U.S.

Department of Education, Room 3045,

ROB–3, 600 Independence Avenue, SW,

Washington, DC 20202–5345.

Telephone: (202) 708–8242. Individuals

who use a telecommunications device

for the deaf (TDD) may call the Federal

Information Relay Service (FIRS) at 1–

800–877–8339 between 8 a.m. and 8

p.m., Eastern Daylight time, Monday

through Friday.

Individuals with disabilities may

obtain this document in an alternate

format (e.g., Braille, large print,

audiotape or computer diskette) on

request to the contact persons listed in

the preceding paragraph.

SUPPLEMENTARY INFORMATION:

General

Section 455(b) of the Higher

Education Act of 1965, as amended (the

HEA), 20 U.S.C. 1087e(b), provides that

variable interest rates apply to loans

made under the Direct Loan Program.

Section 427A of the HEA, 20 U.S.C.

1077a, provides that variable interest

rates apply to certain loans made under

the FFEL Program. The variable rates for

Direct Loan Program loans and FFEL

Program loans are determined annually

and apply for each 12-month period

beginning July 1 and ending June 30.

The formulas for determining the

interest rates charged to borrowers for

Direct Loan Program and FFEL Program

loans, except for Consolidation loans in

both programs, are provided in the

following legislation:

• For Direct Loan Program loans for

which the first disbursement is made

before July 1, 1998, section 455 of the

HEA (20 U.S.C. 1087e).

• For FFEL Program loans for which

the first disbursement is made before

July 1, 1998, section 427A of the HEA

(20 U.S.C. 1077a).

• For FFEL Program loans and Direct

Loan Program loans for which the first

disbursement is made on or after July 1,

1998, and before October 1, 1998,

section 8301 of Pub.L. 105–178 (the

Transportation Equity Act for the 21st

Century).

The interest rate calculations for all

parent and student loans in the Direct

Loan and FFEL programs for which the

first disbursement is made on or after

July 1, 1998, and before October 1, 1998,

are based on the bond equivalent rate of

the 91-day Treasury bills auctioned at

the final auction held before June 1.

The formulas for determining the

interest rates charged to borrowers of

Direct Consolidation loans and FFEL

Consolidation loans are provided in the

following legislation and regulation:

• For Direct Consolidation loans, 34

CFR 685.215(g).

• For FFEL Consolidation loans for

which the consolidation loan

application was received by an eligible

lender before November 13, 1997,

section 428C(c)(1) of the HEA (20 U.S.C.

1078–3(c)(1)).

• For FFEL Consolidation loans for

which the consolidation loan

application was received by an eligible

lender on or after November 13, 1997,

and before October 1, 1998, section

428C(c)(1)(D) of the HEA, 20 U.S.C.

1078–3(c)(1)(D) (as added by the

Emergency Student Loan Consolidation

Act of 1997).

Section 455(g) of the HEA, 20 U.S.C.

1087e(g), gives the Secretary discretion

to establish the interest rates for Direct

Consolidation loans. Under 34 CFR

685.215(g), for consolidation loans, the

interest rate is the same as the interest

rate for student and parent loans made

during that time.

As described later in this notice, the

interest rate for FFEL Consolidation

Loans is set by statute.

The bond equivalent rate of the 91-

day Treasury bills auctioned at the final

auction held before June 1 of each year

is used as the index to calculate annual

interest rates charged to borrowers with

the following loans:

Federal Direct Stafford/Ford loans

(Direct Subsidized).

Federal Direct Unsubsidized Stafford/

Ford loans (Direct Unsubsidized).

Federal Direct Subsidized

Consolidation loans.

Federal Direct Unsubsidized

Consolidation loans.

FFEL Stafford loans (subsidized and

unsubsidized).

FFEL Consolidation loans for

applications received on or after

November 13, 1997.

Federal Direct PLUS loans for which

the first disbursement is made on or

after July 1, 1998.

Federal Direct PLUS Consolidation

loans made on or after July 1, 1998.

FFEL PLUS loans for which the first

disbursement was made on or after July

1, 1998.

The bond equivalent rate of the 52-

week Treasury bills auctioned in the

final auction held before June 1 of each

year is used to calculate annual interest

rates charged to borrowers with the

following loans:

Federal Direct PLUS loans for which

the first disbursement was made before

July 1, 1998.

Federal Direct PLUS Consolidation

loans for which the first disbursement

was made before July 1, 1998.

FFEL PLUS loans for which the first

disbursement was made before July 1,

1998.

FFEL Supplemental Loans for

Students (SLS).

The bond equivalent rate of the 91-

day Treasury bills auctioned on May 26,

1998, is 5.155 percent, which rounds to

5.16 percent.

The bond equivalent rate of 52-week

Treasury bills auctioned on May 21,

1998, is 5.434 percent, which rounds to

5.43 percent.

William D. Ford Federal Direct Loan

Program

Interest Rates for Direct Subsidized,

Direct Unsubsidized, Direct Subsidized

Consolidation, and Direct Unsubsidized

Consolidation Loans

1. Direct Subsidized, Direct

Unsubsidized, Direct Subsidized

Consolidation, and Direct Unsubsidized

Consolidation Loans for which the first

disbursement was made prior to July 1,

1995—the interest rate may not exceed

8.25 percent: Pursuant to section

455(b)(1) of the HEA, 20 U.S.C.

1087e(b)(1), the interest rate for the

period July 1, 1998, through June 30,

1999, is 8.25 percent (5.16 percent plus

3.1 percent equals 8.26 percent, which

exceeds the 8.25 percent cap).

2. Direct Subsidized, Direct

Unsubsidized, Direct Subsidized

Consolidation, and Direct Unsubsidized

Consolidation Loans for which the first

disbursement was made on or after July

1, 1995, and before July 1, 1998—the

interest rate may not exceed 8.25

percent:

(a) During the in-school, grace, and

deferment periods: Pursuant to section
Federal Register / Vol. 63, No. 130 /Wednesday, July 8, 1998 / Notices 37027

455(b)(2) of the HEA, 20 U.S.C.

1087e(b)(2), the interest rate for the

period July 1, 1998, through June 30,

1999, is 7.66 percent (5.16 percent plus

2.5 percent equals 7.66 percent).

(b) During all other periods: Pursuant

to section 455(b)(1) of the HEA, 20

U.S.C. 1087e(b)(1), the interest rate for

the period July 1, 1998, through June 30,

1999, is 8.25 percent (5.16 percent plus

3.1 percent equals 8.26 percent, which

exceeds the 8.25 percent cap).

3. Direct Subsidized and Direct

Unsubsidized Loans for which the first

disbursement is made on or after July 1,

1998, and before October 1, 1998—the

interest rate may not exceed 8.25

percent:

(a) During the in-school, grace, and

deferment periods: Pursuant to section

8301 of Pub. L. 105–178, the interest

rate for the period July 1, 1998, through

June 30, 1999, is 6.86 percent (5.16

percent plus 1.7 percent equals 6.86

percent).

(b) During all other periods: Pursuant

to section 8301 of Pub.L. 105–178, the

interest rate for the period July 1, 1998,

through June 30, 1999, is 7.46 percent

(5.16 percent plus 2.3 percent equals

7.46 percent).

4. Direct Subsidized Consolidation

and Direct Unsubsidized Consolidation

Loans for which the first disbursement

is made on or after July 1, 1998, or for

which the consolidation loan

application is received by the Secretary

on or after July 1, 1998—the interest rate

may not exceed 8.25 percent:

(a) During the in-school, grace, and

deferment periods: Pursuant to section

455(g) of the HEA, 20 U.S.C. 1087e(g)

and 34 CFR 685.215(g), the interest rate

for the period July 1, 1998, through June

30, 1999, is 6.86 percent (5.16 percent

plus 1.7 percent equals 6.86 percent).

(b) During all other periods: Pursuant

to section 455(g) of the HEA, 20 U.S.C.

1087e(g) and 34 CFR 685.215(g), the

interest rate for the period July 1, 1998,

through June 30, 1999, is 7.46 percent

(5.16 percent plus 2.3 percent equals

7.46 percent).

Interest Rates for Direct PLUS and

Direct PLUS Consolidation Loans

1. Direct PLUS loans and Direct PLUS

Consolidation loans for which the first

disbursement was made before July 1,

1998: Pursuant to section 455(b)(4) of

the HEA, 20 U.S.C. 1087(e)(b)(4), the

interest rate for the period July 1, 1998,

through June 30, 1999, is 8.53 percent

(5.43 percent plus 3.1 percent equals

8.53 percent).

2. Direct PLUS loans for which the

first disbursement is made on or after

July 1, 1998, and before October 1,

1998—the interest rate may not exceed

9 percent: Pursuant to section 8301 of

Pub.L. 105–178, the interest rate for the

period July 1, 1998, through June 30,

1999, is 8.26 percent (5.16 percent plus

3.1 percent equals 8.26 percent).

3. Direct PLUS Consolidation loans

for which the first disbursement is made

on or after July 1, 1998, or for which the

consolidation loan application is

received by the Secretary on or after July

1, 1998—the interest rate may not

exceed 9 percent: Pursuant to section

455(g) of the HEA, 20 U.S.C. 1087e(g)

and 34 CFR 685.215(g), the interest rate

for the period July 1, 1998, through June

30, 1999, is 8.26 percent (5.16 percent

plus 3.1 percent equals 8.26 percent).

Federal Family Education Loan

Program

Interest Rates for ‘‘Converted’’ Variablerate FFEL Stafford Loans

1. FFEL Stafford loans which were

made with an interest rate of eight

percent with an increase to ten percent

and that were subject to the ‘‘windfall

profits’’ provisions of section 427A(i)(1)

of the Act, 20 U.S.C. 1077a(i)(7), and

that have been converted to a variable

interest rate—the interest rate may not

exceed 10 percent: Pursuant to section

427A(i)(7)(A) of the HEA, 20 U.S.C.

1077a(i)(7)(A), the interest rate for the

period July 1, 1998, through June 30,

1999, is 8.41 percent (5.16 percent plus

3.25 percent equals 8.41 percent).

2. Seven percent, eight percent, nine

percent and eight/ten percent loans that

were subject to the ‘‘windfall profits’’

provisions of section 427A(i)(3) of the

HEA, 20 U.S.C. 1077a(i)(3), and that

have been converted to a variable

interest rate—the interest rate may not

exceed seven percent, eight percent,

nine percent, or ten percent,

respectively: Pursuant to section

427A(i)(7)(A) of the Act, 20 U.S.C.

1077a(i)(7)(A), the interest rate for the

period July 1, 1998, through June 30,

1999, is 7 percent for 7 percent loans,

8 percent for 8 percent loans, 8.26

percent for 9 percent loans, and 8.26

percent for 10 percent loans (5.16

percent plus 3.1 percent equals 8.26

percent, which exceeds the cap for 7

percent loans and 8 percent loans).

Interest Rates for Regular Variable-rate

FFEL Stafford Loans

1. FFEL Stafford loans made to ‘‘new’’

borrowers for which the first

disbursement was made (a) on or after

October 1, 1992, but before July 1, 1994,

or (b) on or after July 1, 1994, for a

period of enrollment ending before July

1, 1994, (i.e., a late disbursement)—the

interest rate may not exceed 9 percent:

Pursuant to section 427A(e)(1) of the

HEA, 20 U.S.C. 1077a(e)(1), the interest

rate for the period July 1, 1998, through

June 30, 1999, is 8.26 percent (5.16

percent plus 3.1 percent equals 8.26

percent).

2. FFEL Stafford loans made to all

borrowers, regardless of prior

borrowing, for a period of enrollment

that includes or begins on or after July

1, 1994, for which the first disbursement

was made on or after July 1, 1994, but

before July 1, 1995—the interest rate

may not exceed 8.25 percent: Pursuant

to section 427A(f)(1) of the HEA, 20

U.S.C. 1077a(e)(1), the interest rate for

the period July 1, 1998, through June 30,

1999, is 8.25 percent (5.16 percent plus

3.1 percent equals 8.26 percent which

exceeds the 8.25 percent cap).

3. FFEL Stafford loans made to all

borrowers, regardless of prior

borrowing, for which the first

disbursement was made on or after July

1, 1995, but before July 1, 1998—the

interest rate may not exceed 8.25

percent:

(a) During the in-school, grace, or

deferment period: Pursuant to section

427A(g)(2) of the HEA, 20 U.S.C.

1077a(g)(2), the interest rate for the

period July 1, 1998, through June 30,

1999, is 7.66 (5.16 percent plus 2.5

percent equals 7.66 percent).

(b) During the repayment period

(except deferment periods): Pursuant to

section 427A(f)(1) of the HEA, 20 U.S.C.

1077a(f)(1), the interest rate for the

period July 1, 1998, through June 30,

1999, is 8.25 percent (5.16 percent plus

3.1 percent equals 8.26 percent, which

exceeds the 8.25 percent cap).

4. FFEL Stafford loans, for which the

first disbursement is made on or after

July 1, 1998, but before October 1,

1998—the interest rate may not exceed

8.25 percent:

(a) During the in-school, grace, and

deferment periods: Pursuant to section

8301 of Pub.L. 105–178, the interest rate

for the period July 1, 1998, through June

30, 1999, is 6.86 percent (5.16 percent

plus 1.7 percent equals 6.86 percent).

(b) During all other periods: Pursuant

to section 8301 of Pub.L. 105–178, the

interest rate for the period July 1, 1998,

through June 30, 1999, is 7.46 percent

(5.16 percent plus 2.3 percent equals

7.46 percent).

Interest Rates for FFEL PLUS and FFEL

Supplemental Loans for Students Loans

1. Variable-rate FFEL PLUS loans and

FFEL SLS loans made before October 1,

1992—the interest rate may not exceed

12 percent: Pursuant to section

427A(c)(4)(B) of the HEA, 20 U.S.C.

1077a(c)(4)(B), the interest rate for the

period July 1, 1998, through June 30,
37028 Federal Register / Vol. 63, No. 130 /Wednesday, July 8, 1998 / Notices

1999, is 8.68 percent (5.43 percent plus

3.25 percent equals 8.68 percent).

2. FFEL SLS loans for which the first

disbursement was made on or after

October 1, 1992, for a period of

enrollment beginning before July 1,

1994—the interest rate may not exceed

11 percent: Pursuant to section 427(c)(4)

of the HEA, 20 U.S.C. 1077a(c)(4), the

interest rate for the period July 1, 1998,

through June 30, 1999, is 8.53 percent

(5.43 percent plus 3.1 percent equals

8.53 percent).

3. FFEL PLUS loans for which the

first disbursement was made on or after

October 1, 1992, but before July 1,

1994—the interest rate may not exceed

10 percent: Pursuant to section

427A(c)(4)(D) of the HEA, 20 U.S.C.

1077a(c)(4)(D), the interest rate for the

period July 1, 1998, through June 30,

1999, is 8.53 percent (5.43 percent plus

3.1 percent equals 8.53 percent).

4. FFEL PLUS loans for which the

first disbursement was made on or after

July 1, 1994 but prior to July 1, 1998—

the interest rate may not exceed 9

percent: Pursuant to section 427(c)(4)(E)

of the HEA, 20 U.S.C. 1077a(c)(4)(E),the

interest rate for the period July 1, 1998,

through June 30, 1999, is 8.53 percent

(5.43 percent plus 3.1 percent equals

8.53 percent).

5. FFEL PLUS loans for which the

first disbursement is made on or after

July 1, 1998, and before October 1,

1998—the interest rate may not exceed

9 percent: Pursuant to section 8301 of

Pub.L. 105–178, the interest rate for the

period July 1, 1998, through June 30,

1999, is 8.26 percent (5.16 percent plus

3.1 percent equals 8.26 percent).

Interest Rates for FFEL Consolidation

Loans

1. FFEL Consolidation loans made

before July 1, 1994—the interest rate

may not exceed 9 percent: Pursuant to

section 428C(c)(1)(B) of the HEA, 20

U.S.C. 1078–3(c)(1)(B), the interest rate

is the weighted average of the interest

rates on the loans consolidated, rounded

to the nearest whole percent.

2. FFEL Consolidation loans made on

or after July 1, 1994, for which the

consolidation loan application was

received by an eligible lender before

November 13, 1997: Pursuant to section

428C(c)(1)(C) of the HEA, 20 U.S.C.

1078–3(c)(1)(C), the interest rate is the

weighted average of the interest rates on

the loans consolidated, rounded upward

to the nearest whole percent.

3. FFEL Consolidation loans for

which the consolidation loan

application is received by an eligible

lender on or after November 13, 1997—

the interest rate may not exceed 8.25

percent: Pursuant to section

428C(c)(1)(D) of the HEA, 20 U.S.C.

1078–3(c)(1)(D), the interest rate for the

period July 1, 1998, through June 30,

1999, is 8.25 percent (5.16 percent plus

3.1 percent equals 8.26 percent which

exceeds the 8.25 percent cap).

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documents are located under Option

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and Press Releases.

Note: The official version of this document

is the document published in the Federal

Register.

(Authority: 20 U.S.C. 1077a and 20 U.S.C.

1087e).

Dated: July 6, 1998.

David A. Longanecker,

Assistant Secretary for Postsecondary

Education.

[FR Doc. 98–18267 Filed 7–6–98; 2:40 pm]

BILLING CODE 4000–01–P